Newzoo, a games industry market research and consulting firm firm has published a report entitled "Newzoo Topic Report DLC, Pre-Owned & Digital Distribution". This explains the ongoing push towards distributing games online, as opposed to physical copies on disc. It explains that there are three basic reasons for this:

1 Free-Riders: Only 44% of US console gamers ever spends money on Console Games
2 Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
3 DLC: Americans will spend $950 million in 2011 on game and add-on content downloads

In their "key facts" summary, Newzoo make the point that the retail channel will not go away, since this is an important outlet. Retail distribution has an important advantage when it comes to eyeballs, plus the box makes for a pleasing, tangible gift. What's nicer to receive: a scrap of paper with an unlock code, or a nicely presented gift box with the same unlock code and perhaps a collectible item? However, the crucial point is that the enclosed disc will disappear as superfast broadband becomes increasingly ubiquitous. For aficionados of tangible representations of their intengible computer games, having the presentation box can make for a satisfying addition to their collection.

In its second reason, the report points out that the games companies see no income or more appropriately, "kickback", from used games being sold legally in high street second hand shops or sold just as legally, directly between private individuals. These companies like online distribution, because it does away with this used market completely.

Of course, this little racket forces gamers to buy "new" games all the time at much higher prices, fattening the companies' bottom lines at the expense of their customers. Nice. This is exactly the kind of silver bullet technical solution that the big music and movie industries are looking for, but thankfully haven't found.

What the report doesn't say, is that this also does away with a purchaser's first-sale rights in the name of attempting to increase profits. The fact is that these companies have no right to a kickback from used sales and this loss of customer freedom and rights is a result of simple money-grubbing greed on their part and possibly a false sense of entitlement. They achieve this restriction through the DRM systems of the various online distribution systems, such as Steam and more recently, Origin, which deliberately disable the transfer of an unwanted game from one subscriber account to another. For a great deal of info regarding used sales and the blinkered approach of the games companies, please see some of the various articles published by Techdirt, by clicking on this search link here. An especially pertinent article from that search is, Video Game Exec Claims Used Games Defraud The Industry. There's also this important article, which explains How The Used Book Market On Amazon Helps The Sale Of New Books. While the story is about books, the principle is equally applicable to computer games.

The full Newzoo report is available free of charge online and is full of stats, figures and brightly coloured pie charts for the reader to chew over.

The report can be downloaded as a pdf here. Note that the file was not downloading very reliably at the time this news article was published. The same content can also be viewed as a web presentation, here. The "key facts" summary is at gamesindustryblog.com and the firm's home page is at www.newzoo.com

this is really going to piss off alot of diehards. Online delivery systems like steam are nice for managing content. But i personally like to have a physical copy of my fav PC games. for example I love UT3 so i bought it. I then proceded to input the key into steam but i like having a physical copy.

They just want every thing digital so you cannot sell your game after. Steam might sell games cheap but it all so stops me from reselling my games and cashing a bit back.

As no steam game has any resell value games are only worth 1/2 price when new.

So what do the rest do ?. So the rest buy consoles just to watch netflix ?.

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i think its implied that they borrow them. though the latter isnt too unbelievable considering that HTPC's are getting more popular and to people that dont want to play configuration owning a PS3 or xbox with these services being easily obtainable is an easier and most cost effective way to get what they want. 7.1 surround instant movies HD video and a wireless controller. what could be simpiler?

I call BS, they can anticipate the sales as much as they want but all their doing is adding more factors on the expenses of the individual who isn't interested enough to buy on release, they will make less money if this happened I can almost guarantee that because I can see it enforcing piracy and making alot of the casual gamers lose interest.

I can use myself as an example, I wasn't interested enough to pick up a copy of Uncharted 3 on release and em currently waiting for it to go dirt cheap before I consider touching the game. If it doesn't reduce in price then it is something that I can see myself passing on and saving the money for the games I am actually interested in.

what about reselling whole steam account : ) ? as far as i know, it is possible and ppl are doing so, at least in country where i live in. One game per account is the way to go

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Oh, that happens alright and I don't think there's much that Valve can do to stop it. However, you can see the problem where you have lots of games and have to log in separately for each one. I have over 100 games, so this isn't very practical.

Im highly incensed at having to buy a disc now , and inserting it only to find it goes to download by default sometimes anyway, or like homefront, 5 gig comes off the disc, 6 gig as an"update", this setup is so wrong on so many levels.

Its not my fault theres piracy, and my privacy and convenience and choice should not have to suffer as a result.latest c.o.d is 100$ in aus, way too much money too.

Im highly incensed at having to buy a disc now , and inserting it only to find it goes to download by default sometimes anyway, or like homefront, 5 gig comes off the disc, 6 gig as an"update", this setup is so wrong on so many levels.

Its not my fault theres piracy, and my privacy and convenience and choice should not have to suffer as a result.latest c.o.d is 100$ in aus, way too much money too.

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Duh! You said it right there, +1

And of course the most outrageous thing is that there's no proof at all that this damned "piracy" is hurting content producers of any kind. Big Content just relies on false figures and their political influence to screw people over. :shadedshu

This would be more relevant to the PC games market imo, I don't even own a DVD drive or anything on my main rig and I honestly don't see the need for one nowadays although maybe down the track I'll get an external but right now for me it's being out-phased by my home network. When Fibre connection finally gets released in my area I'll be ready to throw out my CD's and stick with USB/External for transferring files on the go. With fibre on its way, it's hard not to think that a big part of the next generation of consoles will begin to rely on those services eg. storing saved files and keys into the cloud or even be able to play demos from it too, I mean consoles already have this function via PSN/Xbox live but its not very practical for those with really shit connections or low bandwidth since they still need to download and obtain the content.

And of course the most outrageous thing is that there's no proof at all that this damned "piracy" is hurting content producers of any kind. Big Content just relies on false figures and their political influence to screw people over. :shadedshu

Hah qubit, i read that article not long ago too i think, it is a sham, its a poor excuse to monitor us like children or wrong doers, and we are not either.

To top it all off, we are providing them with there means to an income, they should be bending over backwards to please us, not treat us as criminals, huge sham i feel.

Take bf 3, how many copies sold since released,3 million? more? times what?=60$-80$ average per person?=x$$$$.$$$$$$ millions.?

I suppose you can go in circles though, its either buy it and shut up and play, or vote with the feet, and miss out.its a hard one!!

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Yes, it is a tough decision indeed. For me, the only DRM that I will tolerate is Steam's - and note that I said "tolerate", as it still stinks with the loss of first sale rights.

I'm interested in BF3, but I'm in no hurry to get it, because I'm not too sure what I think of Origin. I have to look into it properly, before I make a decision. Besides, waiting is easy for me, as I have several triple A games I bought ages ago and still haven't played.

1 Free-Riders: Only 44% of US console gamers ever spends money on Console Games
2 Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
3 DLC: Americans will spend $950 million in 2011 on game and add-on content downloads

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#1: Not I, I buy all my Wii games new.
#2: Not I, last time I did that was over 10 years ago.
#3: I've only bought one DLC, ever, and don't intend to buy another.

Two things:
1) If they move to an online-only model, how many sales are going to lose due to lack of access and/or choice?
2) People need to wise up and not buy DLC. It's only encouraging them to put a noose on consumer choice.

#1: Not I, I buy all my Wii games new.
#2: Not I, last time I did that was over 10 years ago.
#3: I've only bought one DLC, ever, and don't intend to buy another.

Two things:
1) If they move to an online-only model, how many sales are going to lose due to lack of access and/or choice?
2) People need to wise up and not buy DLC. It's only encouraging them to put a noose on consumer choice.

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Thankyou, those "two things" are very good points.

I do buy DLC despite it going against the grain, but only if it's very cheap, which usually means on a Steam special offer.